Efforts to restore America's competitive position must proceed from an accurate definition of what competitiveness is. The U.S. competitiveness problem has three dimensions: long-standing structural problems, macroeconomic policies, and the trade and economic policies of foreign countries. The long-term erosion of U.S. competitiveness is suggested by the behavior of several different indicators: wages, income, and profit; productivity; merchandise trade; current account; technology; human resources; and capital formation. Growing acknowledgment of the competitiveness problem increases the likelihood of new policy initiatives. To create an environment that is conducive to private sector productivity, government must undertake a number of steps: making a sustained and substantial reduction in the federal budget deficit, developing policy initiatives to strengthen the international trading environment, making domestic trade policy a national priority, making technology a continuing competitive advantage, and creating policies to improve America's human resources. U.S. corporations, colleges and universities, and labor unions have a primary responsibility for restoring American competitiveness. (YLB)